Pharoah Construction was awarded a contract to construct an interchange at the junction of two major freeways in a Canadian cityat a total contract price of $10,140,000. The estimated total cost to complete the project is $8,112,000, and it is expected to taketwo years. Using the percentage-of-completion method and the cost-to-cost basis, prepare the journal entry to recognize the revenue andgross proft for the frst year.

Pharoah Construction was awarded a contract to construct an interchange at the junction of two major freeways in a Canadian cityat a total contract price of $10,140,000. The estimated total cost to complete the project is $8,112,000, and it is expected to taketwo years. Using the percentage-of-completion method and the cost-to-cost basis, prepare the journal entry to recognize the revenue andgross proft for the frst year.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter3: Income Sources

Section: Chapter Questions

Problem 88P

See similar textbooks

Similar questions

On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450
A&B Construction enters into a contract to construct a bridge for $1,400,000. At the outset, A&B estimates that it will cost $1,200,000 to build the bridge. Actual costs in 2017 are $540,000. Actual costs in 2018 are less than expected and amount to $600,000. The profits reported under the completed contract and percent of completion methods for each year would be: Select one: Completed Contract Percentage of Completion ○ a. 2017 2018 2017 2018 $0 $200,000 $90,000 $170,000 O b. Completed Contract Percentage of Completion 2017 2018 2017 2018 $0 $260,000 $90,000 $170,000 Completed Contract Percentage of Completion 2017 2018 2017 $0 $260,000 $123,000 2018 $197,000 ○ d. Completed Contract Percentage of Completion 2017 2018 2017 $0 $260,000 $90,000 2018 $110,000
Castro Construction signs a contract to build a hotel. The construction is scheduled to begin on January 1, 2016 and is estimated to take four years to complete. Castro expects that its total cost for this project would be $108 million and charges its client $151 million in total. Based on the given actual costs incurred, complete the following table showing the percentage of completion, revenue recognized and gross profit for each year. Assume the company uses the percentage-of-completion method for revenue recognition. Do not enter dollar signs or commas in the input boxes. Round all numbers to 1 decimal place. Costs Revenue Percentage of Completion Year Gross Profit* Incurred* Recognized* 2016 $12.96 % $ 2017 $28.08 % 2018 $36.72 2019 $30.24 Total $108.00 % *The numbers are in million dollars. %24 %24 %24 %24 %24 %24 %24 %24
In 2021, Cupid Construction Co. (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2021 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2021 $ 135 Cash collected on project during 2021 $ 105 Construction in progress, 12/31/2021 $ 207 Estimated percentage of completion during 2021 60 % How much cash remains to be collected by CCC on the project?
GinebraCorporation recognizes construction revenue and cost using the percentage of completion method. During 2021, a single long-term project was begun which continued through 2021. Information on the project follows: 2021. 2022 Partial billing on contract 1,000,000. 4,200,000 Accounts receivable 1,000,000 3,000,000 Construction cost 1,050,000 1,920,000 Construction in progress 1,220,000 3,640,000 What is the gross profit recognized from this long-term construction contract in year 2021 and 2022, respectively? 2021 2022 A.220,000. 2,280,000 B.170,000. 500,000 C.220,000. 1,000,000 D.170,000. 1,280,000
Sandhill Enterprises Ltd. has entered into a contract beginning in February 2023 to build two warehouses for Tamarisk Structures Ltd. The contract is a non-cancellable fixed-price contract for $9.2 million. The following data pertain to the construction period (all figures in thousands). Costs for the year Estimated costs to complete Progress billings for the year (non-refundable) Cash collected for the year (a) Percent complete Save for Later 2023 2024 2025 $3,645 4,455 800 4,455 900 3,320 2,925 Using the percentage-of-completion method, calculate the percentage complete for each year of the contract. (Round answers to 0 decimal places, eg. 52%) 2023 -0. 3,880 2,000 3,930 2,345 2024 2025 Attempts: 0 of 1 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above. % (c1) The parts of this question must be completed in order. This part will be available when you complete the part above. (c2) The parts of…
Sheridan Construction Company has entered into a contract beginning January 1, 2025, to build a parking complex. It has been estimated that the complex will cost $596,000 and will take 3 years to construct. The complex will be billed to the purchasing company at $902,000. The following data pertain to the construction period. Costs to date Estimated costs to complete Progress billings to date Cash collected to date (a) $256,280 339,720 270,000 Gross profit recognized in 2025 Gross profit recognized in 2026 2025 Sok and Media 240,000 Gross profit recognized in 2027 $ GA $ LA 2026 Using the percentage-of-completion method, compute the estimated gross profit that would be recognized during each year of the construction period. (If answer is 0, please enter O. Do not leave any fields blank.) 5 $429,120 166,880 555,000 505,000 2027 $606,000 902,000 902.000
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Revenue Gross profit (loss) Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Answer is complete and correct. 2024 $ 2,400,000 5,600,000 2,000,000 1,800,000 2024 $ 3,000,000 $ $ 600,000 $ 2025 2026 4,500,000 $ 2,500,000 900,000 $ 300,000 2025 $ 3,600,000 2,000,000 4,000,000 3,600,000 2026 $ 2,200,000 0 4,000,000 4,600,000
Using the percentage-of-completion method and the cost-to-cost basis, prepare the journal entry to record progress billings of$1,638,800 during 2023. Using the percentage-of-completion method and the cost-st basis, prepare the journal entries to record the revenue andgross proft for 2023. Transcribed Image Text:Crane Corp. contracted to build a bridge for $4,820,000. Construction began in 2023 and was completed in 2024. Data relating to the construction are: 2023 2024 Costs incurred $1,561,680 $1,349,600 Estimated costs to complete 1,330,320 Using the percentage-of-completion method and the cost-to-cost basis, how much gross proft should be reported for 2024?
In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What are CCC's estimated remaining construction costs on the project at the end of 2024?
In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What were the construction billings by CCC during 2024?
Rahul